By Tyler Maulsby and Nicole Hyland*
As hurricane Joaquin barrels towards the Northeast, New York lawyers may be reminded of the damage caused by Superstorm Sandy as well as other recent disasters. When a hurricane, warehouse fire, terrorist attack, or other disaster destroys client files, attorneys face the difficult question of how to communicate the loss to clients. Until recently, most ethics guidance on this topic focused on what lawyers can do ahead of time to reduce the risk of loss. Now, a new ethics opinion by the New York City Bar Association's Committee on Professional Ethics ("NYCBA") offers guidance on what lawyers should do after client files are inadvertently destroyed. Here's a helpful summary.
The Duty to Preserve Client Files.
Lawyers have a fiduciary duty to preserve and safeguard property they hold for clients and former clients. Under New York case law, clients have a property interest in - or, at minimum, free access to - most documents or other materials relating to their matters. The duty to preserve client files may continue for at least some period of time after the representation ends, depending on the circumstances. Accordingly, a lawyer may have a duty to notify clients or former clients when their files are destroyed in a disaster.
The Duty to Notify.
Whether an attorney must notify a client about destroyed files depends on various factors, including what types of documents were destroyed, whether the matter is open or closed, and what types of communications the lawyer previously had with the client concerning disposition of the files.
The opinion sets forth a three-tier framework for categorizing client files. Category 1 consists of documents with "intrinsic value or those that directly affect property rights," such as "wills, deeds and negotiable instruments." Category 2 consists of documents that the lawyer "knows or should know may still be necessary or useful to the client." Category 3 consists of documents with relatively little importance that would "'furnish no useful purpose in serving the client's present needs for legal advice.'"
The new opinion concludes that a lawyer should notify a client or former client if Category 1 documents are destroyed in a disaster. Conversely, a lawyer need not notify the client or former client if Category 3 documents are destroyed. Category 2 documents must be analyzed on a case-by-case basis. If the documents relate to an open matter, the opinion concludes that the lawyer must notify the client of their destruction. If the matter is closed, a more nuanced approach is required to determine whether the "client foreseeably may need" the documents. Other factors that may be relevant to a lawyer's decision to notify include:
- The amount of time that has passed since the matter was closed;
- Whether the firm previously gave the client reasonable notice that the files were available to be collected or delivered and whether the client responded to such notice;
- Whether the firm delivered copies of the files to the client at the conclusion of the matter or the client received copies of the files while the matter was ongoing;
- Whether the firm has previously made unsuccessful attempts to contact the client;
- Whether the contents of the file can be reconstructed from other sources.
As the opinion points out, however, "the most prudent option is to notify the client when any Category 2 documents are inadvertently destroyed."
Though the opinion addresses a lawyer's duties after files are already destroyed, it serves as a helpful reminder that lawyers should take steps to ensure they are adequately prepared in the event of a disaster or other disruption to everyday practice.
*Disclosure: Nicole and Tyler serve as Chair and Secretary, respectively, of the New York City Bar Association's Committee on Professional Ethics.